Retirement has been on my mind. Instead of hypotheticals, the planning has become very real. Just a few more months until “game time.”
I can see clearly that the key to a successful retirement isn’t just saving. Instead, setting up an income plan, planning for contingencies and giving some real thought to “What’s next?” are now top of mind.
Let’s face it: You don’t want to spend your golden years hoping the stock market behaves, or that your savings last longer than you do, as you sit on the couch fretting about any number of what-ifs.
Looking both back and ahead, here’s where my mind is when it comes to retirement:
A Quick Look Back
These days are long gone for me, but if you’re in your 20s or 30s, congratulations! Time is still on your side. Don’t squander it. Thanks to the magic of compound returns, the earlier you start, the less heavy lifting you have to do.
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If you’re in your 40s, 50s or even 60s and you haven’t saved much? Don’t panic. The second-best time to start is right now. If retirement is important to you, the key is to save aggressively, reduce unnecessary expenses and maximize every available savings vehicle.
No matter where you are, you should leverage retirement plans, catch-up contributions and employer matching and – of course – set the table for a successful financial retirement by reducing debt and expenses.
It's Go Time!
Saving for retirement is only half the battle. The other half? Living in retirement. A key here is to make sure your essential expenses are covered with income that doesn’t run out.
That’s where guaranteed lifetime income comes in. You’ll want to set up a retirement income plan where your core expenses -- housing, utilities, food, health care -- are covered by income sources that won’t dry up if the stock market takes a dive. At the very least, create a “worst case” or “fallback” plan where, with minor adjustments, you can make this happen.
Here’s how to plan for guaranteed income:
- Maximize military retirement and pensions. If you have a military pension, congratulations! This is one of the best sources of guaranteed income. If you’re eligible for a federal or corporate pension, make sure you understand your payout options.
- Get the most from Social Security. The longer you wait to claim Social Security (up to age 70), the higher your monthly benefit. Delaying could mean thousands of extra dollars per year in guaranteed income.
- Consider income annuities. Think of an income annuity as a "DIY pension." You use part of your retirement savings to buy an annuity, and it guarantees a steady paycheck for life. This can help cover any gaps between your fixed expenses and your other guaranteed income sources.
- Plan for inflation. Inflation is a silent budget-killer. One of the most powerful features of military retirement and Social Security is that they are inflation-adjusted streams of income. Plan for rising costs in your retirement spending forecast.
- Diversify for growth and stability. Not all of your retirement savings should go into guaranteed income streams. You still need investments for long-term growth to handle unexpected expenses and enjoy the fun side of retirement. If all goes well, your retirement could span multiple decades.
Retirement isn’t about hoping you have enough; it’s about planning so you know you do. Start saving now, no matter where you are in life. And when it’s time to retire, create a plan to cover your essentials so you can enjoy retirement without financial stress.
The best retirement plan is one that lets you sleep soundly at night -- no market worries, no guessing games, just a steady paycheck for life. That’s how you truly retire with confidence.
Next month, I’ll focus on tackling the question, “What’s next?”
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